Paying the price of e-commerce errors

What should you do if you discover a pricing error on your e-Commerce site?

One problem with internet trading can be the impact of a pricing error, as United Airlines found to their cost in September 2013. Lucky passengers found that ticket prices quoted on the Company’s website were as little as $0, or as we like to call it – free, while others were as little as $10 for what should have been at least an $800 flight. Of course these were snapped up and no doubt, given the power of word of mouth coupled with the turbo-circulation of social media, friends and family were encouraged to get on the site and grab some of the goodies.

Now, if that had been an ATM doling out free money, everyone who used it would know that they would be guilty of ‘stealing by finding’, and if they encouraged others to take advantage, probably also guilty of many conspiracy and accessory charges. We know machines don’t give out free money and if they do, something has gone wrong. We may not have a duty to put it right or even report it, but we cannot legally profit from it.

So, what of the United Airlines pricing problem? Were the customers guilty of stealing by finding? Definitely not; with the complexity of airline pricing offers in both the US and the UK, and with the crazy deals that some airlines are offering, it is nowhere near as legally clear as taking money from an ATM.

The issue here is that a price is simply an ‘invitation to treat’, an invitation to start the process of creating a binding contract, usually completed by the exchange of money for goods/services. Pricing errors are less of an issue in normal retail trading as there are usual a number of opportunities for staff to pick up all but very minor errors, and, for obvious errors, the staff can withdraw the offer to treat and not complete the sale. If, however, the customer has left the store having paid the asking price, the contract has been completed and the supplier or store has no comeback.

In the case of online trading there is some ‘greyness’, both in the US and the UK as to when a contract is actually created. Other companies, such as Amazon, who have had similar problems, have built into their terms of business, definitions of contract that allow them to cancel an order at any time prior to delivery, even if they have already accepted payment. Of course they are expected to refund immediately.

Wisely, United Airlines decided to honour the tickets they had sold, a sensible move given the probable cost in bad press and lost frequent flyers if they had tried to wriggle out of these deals. Did they have to do this? Probably not for bookings where the flight was a reasonable period in the future and, following a refund of whatever sum the customer did pay, the customer could easily have made alternative arrangements. Where the booking was for an imminent flight, certainly within a few days of the discovery of the error, the customer, having paid, would have been within their rights to insist that United completed its side of the contract.

The legal situation would be very similar in the UK, although generally the issue would be solely about the ticket price. In the US there would be much more opportunity for a frustrated passenger to take action for contingent losses, such as a contract lost through failure to attend a meeting or something similar where damage and loss can be estimated.

Are you looking to improve your eCommerce offering? We can help. Get in touch and we’ll be happy to talk it through.

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